Industry attacks EU telecoms reforms

Telecoms companies, analysts and internet campaigners have lined up to
criticise the European Commission’s new telecoms industry regulations from
all sides, arguing they will fail to achieve their aims.

The package was drawn up by European Commissioner Neelie KroesPhoto: AFP

The measures, unveiled in Brussels on Thursday, are designed to encourage investment in telecoms infrastructure and protect consumers by creating a single market across the bloc, but have come under fire for being too conservative on a several fronts.

The European Commission wants the more than 100 mobile operators across the continent to consolidate to become stronger cross-border players. Investment in infrastructure has dipped in the last five years, while markets with fewer providers, such as the United States and China, have surged ahead.

Anne Bouverot, director general of the mobile industry lobby GSMA, said: “The Commission has rightly identified that increased investment in Europe’s telecoms infrastructure is needed to drive progress across all sectors of the economy but, on balance, the package needs to do much more to support this goal.

“A more thorough and comprehensive approach is required and the mobile industry stands ready to contribute to efforts to develop an ambitious shared agenda to underpin Europe’s digital economy.”

The new package of regulations stops short of creating a single, light-touch regulator that many in the industry believe is required for such mergers to make sense, however. On the other hand it introduces new restrictions on charges for roaming and international calls, which have been profit sources as core telecoms businesses have struggled.

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A spokesman for the Spanish group Telefonica said: “The proposed regulation falls short of addressing the challenges of the sector and will not guarantee the expected results in terms of European competitiveness and consumer benefits through investments, growth and jobs.”

While national incumbents complained that they have not been given enough freedom to restructure and invest, players such as Hutchison 3G UK, the company behind Three, Britain’s smallest mobile network, charged that measures to end roaming fees had been watered down in response to heavy lobbying.

A spokesman said: “The net result will be higher long-term prices and less roaming choice – all via a mechanism that would still leave huge swathes of consumers and member states subject to the roaming charges it is supposed to eliminate.”

The plan aims to abolish roaming charges by 2016, but stops short of the outright ban previously envisaged. Instead wholesale roaming rates will be cut by two thirds, with companies given the option of avoiding red tape by forming airline-style alliances to eliminate them completely and foster mergers.

Chris Watson, a telecoms lawyer at CMS, said: “Ideally we should let a thousand flowers bloom but in the savagely competitive world where a mere handful of operators control the US and China this cull cannot be avoided.”

The regulations also aim to steer a course through the highly-politicised issue of how much network operators should be allowed to control how different types of internet traffic flow over their networks. Some want the ability to charge heavy users, such as Google, for carrying traffic or guaranteeing service levels.

A vocal “net neutrality” lobby on the other side insists that networks should not be allowed to exert such control. They argue it would restrict innovation in the internet industry and increase the power of incumbent telecoms companies.

The regulations are a compromise, banning networks from restricting traffic types but allowing them to sell better service to those who require it, such as internet television providers.

In spite of widespread criticism, some observers backed the European Commission’s approach of restricting telecoms firms with one hand and helping them with the other.

Stephen Howard, head of telecoms research at HSBC, said: “Politics is the art of the possible, and this initiative at last sets Europe on what we regard as a pro-investment course."